Posts Tagged ‘Yuan’

Some 70 hedge funds have bought bitcoin. The crypto currency’s price volatility provide something traditional markets are lacking…action. China has wanted to unshackle itself from the dollar for a long time and now they’re giving yuan-denominated gold contracts a third try. The dollar will soon be under attack: both from a gold-plated yuan and the cryptocurrencies.

Although the economy grew by 6.7% in 2016, the debt is causing a host of problems in China. The main reason many Chinese are buying gold is to preserve wealth against the backdrop of massive fiscal stimulus & lax credit conditions. Never has a big economy piled up so much debt so quickly without serious repercussions. It could be wise to take a lesson from Chinese investors & buy physical gold.

Some factors that will affect the gold price as we go forward. We see the fundamentals taking the gold price back higher and much higher over time. Indeed we do see it rising through its all time peak in the next year and beyond. We also highlight the fact herein that such a rise will occur in all currencies as they weaken against the gold price.

No doubt that Chinese officials see gold as an important asset for the future. Is China’s quest to put the yuan on the world stage closely related to this involvement in gold? Will China actually come up with some kind of a gold-backed currency? Actually, China’s fixation on gold is a story of diversification that can lessen the devastation of central planning gone wrong.

The US federal government is about to hit the debt ceiling, which stands above $18.0 trillion, and Congressional Republicans refuse to raise it. The last debt ceiling fight led to a downgrading of U.S. debt. Another blow to the credibility of the U.S. government could be devastating. Could a US dollar collapse be around the corner?

According to Deutsche, and soon according to virtually all sellside strategists who are slowly but surely grasping the significance of what we have been warning for month on end, QE4 is inevitable. The only problem is that when the Fed pivots from “imminent rate hike” to QE4, it will loose the last shred of credibility it had left. The Fed is now completely trapped.

There is an almost touching faith that markets are rigged when they loft higher, but unrigged when they crash. Who’s to say this crash isn’t rigged? A few things about this “crash” (11% decline from all time highs now qualifies as a “crash”) don’t pass the sniff test. Take your pick–here’s three good reasons to engineer a “crash” that benefits the few at the expense of the many.

There are many reasons for global markets to melt down, but one that doesn’t get enough attention is the strong dollar. The USD has already strengthened by 20%. The damage delivered by the rising dollar has been severe; a move higher from here might prove fatal to emerging markets and faltering U.S. corporate profits.

Blogs, newsletters, and inboxes are cluttered with dire warnings about an event in October 2015. That will supposedly overthrow the dollar as the global reserve currency and cause a catastrophic meltdown of the international financial system. In fact, nothing of the kind is about to happen. There are important and significant events happening behind the scenes.

Over one billion Chinese will soon be scrambling into gold to preserve their purchasing power after the PBOC’s dramatic devaluation announcement. Any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory.

Keep your eye on the market & listen. The global trend in stock prices is still bullish. The market doesn’t yet see any reason to panic over these big picture forces that are playing out under the surface. We’re going through a mild correction but not enough to turn the market bearish. A Chinese currency devaluation might change that but it could still be a year or so away.

Gold is still the safest asset, and every investor should have some in their portfolio. The price of gold will go significantly higher in the years ahead. But contrary to what you hear from the pundits and read in the blogs, gold won’t go higher because China is confronting the US or launching a gold-backed currency.

Its a common view in financial markets that credit deflation is bad for gold prices, as gold nowadays is regarded as an asset to be sold in the scramble for cash when people are forced to pay their debts. Distressed speculators will come under pressure to sell gold, but this argument ignores the certainty that during a credit deflation government-issued currencies always weaken against gold.

China is soon going to want to disclose its gold holdings in an effort to have the yuan join the IMF’s currency basket – the SDR, currently having only the dollar, euro, yen & British pound. If China’s gold reserve is revealed this year and the size of the addition surprises to the upside, it is going to be a major shot across the bow of the U.S. dollar.

Gazprom Neft, the oil arm of state gas giant Gazprom, said on Friday that since the start of 2015 it had been selling in renminbi all of its oil for export down the East Siberia Pacific Ocean pipeline to China. Summing it all, the PetroYuan represents the intersection of a dying petrodollar & an ascendant renminbi.

If you look at nearly everything China has done in recent years from a financial and economic standpoint, it can be seen they are preparing the yuan to become a “major” and international currency. Whatever percentage the yuan gains of the SDR pie will come at the expense of the dollar’s piece.

Here is the best reason to buy and hold gold and silver, at any price, especially at these artificially suppressed prices. Gold and silver, are a means of economic freedom & independence from the de facto corporate federal government doing everything it can to enslave the country & succeeding quite well.

China’s new international gold fund expects to raise 100 billion yuan or $16 billion. About 60 countries have invested in the fund, which will in turn facilitate gold purchase for the central banks of member states to increase their gold holdings. The new project marks another step forward in the internationalisation of the Yuan.

China IS acquiring thousands of tons of GOLD & creating new multilateral lending institutions. China WILL announce an upward revision in its official gold holdings in sometime. But the reasons for the acquisition of gold & the updated disclosures, if they happen, are NOT the ones the blogosphere believes. Herein is the Truth.

Those who generate real wealth & employment need support, not penalties on how they choose to go about their business. A cash ban does not address any substantive issues. What is needed is a sensible economic proposal & political courage to implement a Cashless Society, which so far seems to be lacking.